NEAR GameFi: Play-to-Earn, Metaverse & The Future of Gaming
One of the richest people on the planet, Facebook CEO Mark Zuckerberg has been an ardent advocate for the metaverse lately. At Meta Connect 2022, he defined gaming as a domain that could significantly benefit from the metaverse and virtual reality (VR) technologies.
McKinsey estimates that the potential impact the metaverse will have on the gaming industry by the year 2030 lies within the range between US$108 billion and US$125 billion.
In this article, I’m going to try and untangle the web3 of GameFi, as well as figure out what the future of gaming holds for the NEAR Protocol.
What’s (NEAR) GameFi?
GameFi stands for ‘Game Finance’ and is part of a broader DeFi (Decentralized Finance) space. The term was coined back in 2020 by Andre Cronje, the founder of Yearn Finance — a project that at its peak had just shy of US$7 billion in total value locked.
In the past, games had internal currencies that users could spend on certain items or upgrades. Except for secondary markets where players had an opportunity to sell those for real money, in-game virtual currencies had no use in the outside world. So it was only logical that at some point, there will be someone to fill the niche.
With the vast majority of distributed ledger networks offering low fees and fast confirmation times, on-chainization has become a great tool for gamifying legacy systems. There have been numerous developments in the GameFi area since its inception, but today, I’d like to take a closer look at the NEAR ecosystem, of which INC4 is a proud Guild member.
In its captivating series of blog posts called NEAR & Gaming (Part 1, Part 2, Part 3, Part 4), the protocol’s team interviews the top managers of the largest Web3 gaming companies that picked NEAR as their go-to engine.
Apart from the visionary aspect, the insight I personally was looking for was the reasoning behind those firms’ decision to build atop NEAR. Having carefully analyzed the materials available at the time of writing, I’ve decided to summarize my findings and share them with you.
Whether a game experiences a steady, incremental growth or goes viral, it is imperative that you have sufficient capacity in order to withstand the influx of new users. If the game is not working, users will simply quit it, leaving you with financial and reputational loss. In this regard, NEAR has recently commenced the first phase of its sharding roll-out — a move that will make the protocol more scalable than ever.
One of the respondents mentions that a big advantage of NEAR Protocol is that the end-user doesn’t even have to know how to interact with crypto, with all the mechanisms running under the hood. This is especially important during the transition phase when most people aren’t crypto-native (yet), and most games are Web2-only.
Another interviewee says that they utilize NEAR for their back-end infrastructure in an attempt to combine the best of both worlds, making sure that seamlessness and accessibility of Web3 gaming is on par with that of Web2.
Instead of requiring core developers to dive into the specifics of GameFi tokenomics in general and certain DeFi components such as yield farming in particular, one company has decided to run the two processes in parallel, focusing on mobile development exclusively in one and digitizing in-game artifacts in the other.
Integration with off-chain
Another breakthrough idea, although vastly present in other blockchain-related areas already, is enabling gamers to not only buy and sell their items, but also redeem them towards those offered by conventional businesses, such as flight miles.
It is much easier to receive financing needed for development and further activities from a GameFi community that fully comprehends the innovative nature of Web3 and Web3 gaming. One such community is Human Guild, which assists game designers with bringing their ideas to life, going live on mainnet, and making improvements to their products. NEAR itself labels Human Guild as the one ‘at the forefront of Web3 gaming.’
Decentralized autonomous organizations are viewed as a way to increase engagement by allowing gamers to take votes within the metaverses and determine the further course of action in the form of feature/add-on/DLC requests.
With the arrival of GameFi, non-fungible tokens now finally have an opportunity to serve one of their most-advertised purposes — bringing assets (in our case, in-game ones) on-chain, giving them a real value and for their holders, the sense of meaningful ownership.
Web3 Gaming Market Size
With Web3 gaming being an industry still in its infancy, it comprised approximately 50% of transactions made across a pool of 50 networks, according to a joint Q3 2022 GameFi analytics report put together by DappRadar and Blockchain Game Alliance. This share has been steady for some time now, which may be a sign that the crypto gaming industry is maturing.
From July to September, 912,000 Unique Active Wallets (UAW) were querying game-related smart contracts on a daily basis, which marked a 21-percent increase year-over-year. It is important to note, however, that UAW is not the same as daily active users (DAU), because a single person can use multiple wallets to connect to a single game, while some games do not require wallets to be connected at all.
Venture capital investment in the Web3 gaming space was on the rise as well. For better illustration, in just 6 months of this year, the industry managed to raise 45% more funds than in all of 2021. This may signal that even despite the bear market, big funds see the potential of crypto gaming and are willing to bet their money on it as part of the broader Web3 universe.
Speaking of NEAR’s Web3 gaming ecosystem, curated catalog AwesomeNEAR listed just nine projects around this time last year. Their number now stands at 108, which is impressive growth given that the crypto winter is supposedly far from over. Such an increase could not be achieved without the NEAR Foundation’s long-term commitment towards making its protocol Web3 gaming-friendly — game devs simply wouldn’t be flocking to a platform that didn’t account for their interests enough.
Play-to-Earn Games on NEAR: Challenges of Adoption
A passive income dream come true, Play-to-Earn (P2E) introduces a future gamer model. The arrival of P2E games will greatly complement the range of monetization tools already available to professional gamers around the world, such as Twitch live stream donations, Patreon subscriptions, or merchandise sales.
Despite the industry’s rapid progress, the mass adoption of Play-to-Earn games (including those atop NEAR) presents a number of challenges. From my point of view, they are inherited from the larger crypto industry, and what I mean by that is that many people are still reluctant to go on-chain because they simply do not understand how to operate in digital assets and distributed ledger systems underpinning them, let alone engage in more advanced domains such as DeFi.
A great way to overcome that obstacle has already been suggested throughout this article — a regular end-user does not necessarily need to know that their favorite game is fueled by a blockchain. All reward-generating activities — e.g., yield farming or liquidity mining — may be undertaken by a project’s dedicated team rather than by users themselves. The gamers may be offered interactive dashboards where they can pick the most attractive, hand-picked options and claim their rewards, preferably with an opportunity to spend them right away.
The number of Play-to-Earn games on NEAR has been rising, but I’d like to single out Sweat Economy — one of the most promising newcomers. The phenomenon of Sweat Economy is that it has already managed to undergo the Web2-to-Web3 transition everyone talks about so much. Prior to moving onto NEAR Protocol, the Sweatcoin project had an astounding base of over 100 million users and recorded an all-time high of ~US$25 million worth of goods and services exchanged on its internal marketplace. If Sweat Economy succeeds in bringing all those numbers to NEAR, that would mark a huge leap for the protocol and the future of gaming.
$SWEAT Yield Farming on NEAR
Envisioning the positive impact that the release of Sweat Economy would potentially have on the Play-to-Earn segment within the NEAR ecosystem, we at INC4 could not hold our excitement and immediately decided to enable leveraged yield farming and lending opportunities with the $SWEAT token through our PembRock Finance project.
If you’d like to give it a try, just go to the section you are interested in — farming and/or lending — connect your wallet with some $SWEAT in it using the button in the upper-right corner, and pick the option that lists $SWEAT. You will find all related information on the page.
GameFi projects and Play-to-Earn crypto games are just gaining momentum. If you want to develop one of your own, switch an existing one from Web2 to Web3, or explore how we could enrich the number of earning opportunities for those who play your game, reach out and we’ll set up a free consultation for you.